PERNOD-RICARD_REGISTRATION_DOCUMENT_2017-2018

5

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30.06.2018

30.06.2017

Medical expenses and other employee benefits

Medical expenses and other employee benefits

Pension benefits

Actuarial assumptions in respect of the expenses for the period

Pension benefits

Discount rate

2.84%

3.58%

2.62%

3.50%

Average rate of increase in annuities

3.11% Not applicable

3.34% Not applicable

Average salary increase

2.69%

3.33%

2.81%

3.39%

Expected increase in medical expenses Initial rate ●

Not applicable Not applicable

7.05% Not applicable 4.73% Not applicable

6.65% 4.75%

Final rate ●

Other non-eurozone countries

Actuarial assumptions on 30.06.2018 (pension benefits and other) By region

United Kingdom United States

Eurozone countries

Canada 3.56%

Discount rate

2.72%

4.16%

1.69% 1.39% 2.47%

3.59% 1.75% 4.01%

Average rate of increase in annuities

3.44% Not applicable Not applicable

Average salary increase

2.02%

3.50%

3.00%

Expected increase in medical expenses Initial rate ●

5.50% 5.50%

7.15% 4.50%

5.37% 4.50%

3.50% Not applicable 3.48% Not applicable

Final rate ●

The obligation period-related discount rates used within the Eurozone are as follows:

Discount rates are determined by reference to the yield at the balance sheet date on premium category corporate bonds (if available), or on government bonds, with maturities similar to the estimated duration of the benefit obligations. The expected rate of return on assets corresponds to the discount rate, in accordance with the IAS 19 standard.

short-term rate (3-5 years): 0.50%; ● medium-term rate (5-10 years): 1%; ● long-term rate (more than 10 years): 1.5% to 1.90%. ●

The sensitivity of the debt to changes in the discount rate is shown in the table below:

Medical expenses and other employee benefits

Pension benefits

Total 5,240 5,678 4,851

€ million

Commitments on 30 June 2018

5,092 5,521 4,712

148 157 139

Commitments on 30 June 2018 with a 0.5% decrease in the discount rate Commitments on 30 June 2018 with a 0.5% increase in the discount rate

The impact of a change in the rate of increase in medical expenses would be as follows:

Effect of a change

In respect of post-employment medical coverage € million

With current rate

1% increase

1% decrease

On the present value of the benefit obligations on 30 June 2018

113

10

(8) (1)

Expense for FY18

6

0

178

PERNOD RICARD REGISTRATION DOCUMENT 2017/2018